Cutting Physician Payments Is Not the Way to Fix Medicare

Doctors across the country are forced to fight a yearly battle so they can continue to provide quality care to America’s seniors. On Friday, the American Medical Association sent a letter to members of Congress urging action to, yet again, stop steep cuts to Medicare physician payments.

Because of a flawed formula, the sustainable growth rate (SGR), Medicare payments to physicians are continually threatened. Without congressional action, Medicare will cut payments to doctors by 10 percent in 2008 alone, and by 41 percent over the next nine years. Today, Medicare pays physicians about the same as it did in 2001.

It is the AMA’s hope that, this year, Congress won’t deal with the problem by “kicking the can down the road

To ensure patients have access to the best quality care, physicians need to regularly update their practice with investments in new technology, including health information technology. But as practice costs continue to increase, and will be about 20 percent higher in nine years, doctors who treat Medicare patients will find it nearly impossible to invest in health IT in the face of steep Medicare payment cuts.

Congress has an immediate opportunity to strengthen the Medicare program for future generations through financial neutrality. Medicare Advantage (the Medicare private plan program) and Medicare fee-for-service should pay the same amount for health care under each program. Medicare Advantage payments are currently 12 percent higher than fee-for-service payments, giving a more than $5.2 billion per year subsidy to Medicare private health plans that provide eye-popping returns for their stockholders. MedPAC has suggested the fix, stating that “financial neutrality means that the Medicare program should pay the same amount, adjusting for the risk status of each beneficiary, regardless of which Medicare option a beneficiary chooses.